Mechanical Licensing Collective

New music royalties: The Mechanical Licensing Collective and what it means for you

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The new Mechanical Licensing Collective collects digital audio mechanical royalties from download and streaming services. Learn about the collective and see if you qualify to sign up so you can receive these new music royalties.

If you’ve ever heard us speak at a music conference or classroom, we talk about the 14 registrations you need to do as a musician to make sure you get all the royalties owed to you for your music. Starting this year, in the US, that count has bumped up to 15 with the creation of the MLC, the Mechanical Licensing Collective. Here’s what you need to know to give you the background on whether you should register.

Spoiler alert: The answer is yes because it’s easy and free.

Composition vs. sound recording royalties

When you create a new, original song, there are two different copyrights associated with it: one for the composition (the song itself, i.e., the music, melody, lyrics, etc.) and one for the sound recording (the recording of the song captured on your DAW, computer, or recording device). Each copyright generates different revenue streams and each can have different owners.

If you’re an independent artist, you likely own both the composition and sound recording copyright, which means you may receive royalties or license fees when either the composition or the sound recording is sold, performed, licensed, or used in any way by others. Check out our two-part series of blog posts if you’re curious about all the rights and royalties you own and can earn as a songwriter, artist, publisher, label, and producer. Of course, those posts are missing one new revenue stream because it didn’t exist at the time…

Composition Mechanical Royalties

The newest revenue stream is based on the composition copyright. This means it only affects songwriters/composers/lyricists and publishers. (As an independent artist, you may be all of the above, which means you’re owed all of these royalties.) The MLC is empowered to collect for composition mechanical royalties, which means if you’re a songwriter or publisher (or both), you’re entitled to get paid any time your song is “copied.” This takes effect when the song is:

  • Copied onto physical products like CDs, vinyl records, USBs, or cassette tapes
  • Sold as a digital download
  • Sampled in another song
  • Streamed through services like Spotify, Apple Music, Amazon Prime Music, Google Play, Deezer, or others.

Making Money With MusicIn the past, before the Internet paved the way for digital downloading and streaming, the only way a songwriter or publisher could generate revenue via composition copyright was either if the record label paid you to put your song on one of their products (CD, vinyl record, cassette, etc.) or if another artist covered your music. So, in the past it was quite simple: either a record label paid you or another artist did to use your music. The record label would pay a fee based on the amount of copies it was going to produce or the artist who wanted to cover your song for their album would pay you based on the number of copies they were going to produce.

The above is still true, but with the Internet and the creation of digital audio, these mechanical rights got blurred. When songs are downloaded or streamed, do those count as copies? And if so, who pays? Is anything owed?

It took a while to sort out, but in 2018, a unanimous, bi-partisan Congress worked out the details and passed the Music Modernization Act. This settled the questions and allowed the creation of a nonprofit organization to administer blanket mechanical licenses to streaming and download services such as Spotify, Apple Music, Pandora, and more. That nonprofit is the MLC, and it recently received $424.3 million in historic, unmatched mechanical royalties that Spotify, Apple Music, Pandora, Google, and many other music services have been sitting on.

In fact, here’s a list of the amount of money they now have collected from these services over the past two months of public operation:

Mechanical Licensing Collective royalty chart

The Mechanical Licensing Collective

Think of the Mechanical Licensing Collective (MLC) as similar to performance royalty organizations (PROs) like ASCAP or BMI, except where those PROs administer performance royalties, the MLC handles digital audio mechanical royalties generated for musicians and publishers.

The MLC kicked off public operations this January, and its job is to collect mechanical royalties and pay the songwriters, composers, lyricists, and music publishers in their database what is owed to them. By registering at the MLC website and listing your songs in their database, they’ll be able to ensure you’re paid for these type of licenses. In fact, the only way to receive digital audio mechanical royalties from streaming services pursuant to Congress’ compulsory blanket mechanical license is to become a member of the MLC. This is true even if you’re a member of Harry Fox, which collects mechanical license royalties for artists who cover your music. However, the MLC has an arrangement where you can authorize Harry Fox to share your account information with the MLC and pre-populate your account information with the MLC, saving you time.

Mechanical Licensing Collective process

In fact, to learn more about how they collect funds, as well as how to register your music with them, check out its helpful “how it works” page.

The MLC and your music

To ensure you get all the royalties owed to you, we recommend you follow the 14 registrations in our book, Making Money With Music. But you can now add the MLC to your registration checklist!

The first step is to determine if you should register and, if so, whether it’s as a publisher or songwriter/composer/lyricist. Here’s how to decide:

1. If you work with either a third-party music publisher or administrator, or an administrative publisher such as the CD Baby Pro Publishing service, then it’s the responsibility of these groups to sign up with the MLC, collect any royalties, and pay you your share (minus whatever their administrative fees are). If you’re not sure, contact your publisher or administrator before registering with the MLC.

2. If you handle your own publishing, as most independent musicians do, then you should register at the MLC Portal as a publisher.

3. If you haven’t assigned publishing rights to a third-party publisher or an administrative publisher, and haven’t created your own publishing entity and are a songwriter, composer, or lyricist, then you should register with the MLC as a “self-administered” songwriter.

If you have any questions about the above, check out the MLC’s questionnaire to help determine which of the three categories you fit so you can sign up.

Similar to ASCAP or BMI, which collect performance royalties, signing up with the MLC is the first step to getting your music into their database. When you first sign up, they’ll ask you the usual questions to verify your identity as well as for payment and tax information, since the goal is to cut you checks. Follow all the steps, and if you have any questions, contact them. Keep in mind, the MLC is brand new, so the process and the organization will evolve and mature over time.

— — —

To collect all the money that’s owed to you for your published music, be sure to register your music. While signing up at organizations like the MLC, ASCAP, BMI, SEASAC, or SoundExchange takes some time, it’s entirely worth it. A few hours of work will ensure you can collect royalties for your each song you register for your entire life plus 75 years! Very few things in life have that type of return on investment, so head to MLC now and sign-up.

Authors of the critically-acclaimed modern classic, The Indie Band Survival Guide, Billboard Magazine called Randy Chertkow and Jason Feehan “the ideal mentors for aspiring indie musicians who want to navigate an ever-changing music industry.” Their latest book, Making Money With Music (Macmillan) and free Making Money With Music Newsletter, help all musicians — from startups to pros — build a sustainable music business so you can make money in today’s tech-driven music environment.

How to Make More Money With Music, the Complete Guide

About Randy Chertkow and Jason Feehan

Authors of the critically-acclaimed modern classic, The Indie Band Survival Guide, Billboard Magazine called Randy Chertkow and Jason Feehan “the ideal mentors for aspiring indie musicians who want to navigate an ever-changing music industry.” Their latest book, Making Money With Music (Macmillan) and free Making Money With Music Newsletter, help all musicians — from startups to pros — build a sustainable music business so you can make money in today's tech-driven music environment.

5 thoughts on “New music royalties: The Mechanical Licensing Collective and what it means for you

  1. Thank you! Perfect timing! I receive my game-changing video, “San Timoteo Sunrise” by Mott Jordan, today!

    1. SoundExchange collects royalties for digital broadcast streaming from non-interactive services, such as digital radio stations, satellite radio, etc. These are services that you listen to, but can’t choose what is heard, such as Sirius Radio. The MLC collects digital streaming services from interactive digital streaming services like Spotify, YouTube, Apple Music, Amazon Music, etc. These services let you select what you listen to. Think of MLC is a digital narrow-casting royalty collection agency, whereas SoundExchange is a digital broadcasting royalty collection agency. If your music gets played on Spotify, MLC will collect royalties. If it gets played on Sirius Satellite Radio, SoundExchange collects the royalties. Composers need to be a member of both to collect both types of digital royalty streams.

      In addition composers need to belonging to a Performing Rights Organization, such as ASCAP or BMI, which only collect public performance royalties when their songs is played in public venues like stadiums, arenas, theaters, concerts, restaurants, bars, clubs, analog (terrestrial) radio, etc. If the song can be heard in public instead of private, then a PRO collects royalties for that. Think of PROs as collecting royalties for old fashioned analog sound when a song is performed or played by anyone, anywhere the pubic has the ability to access.

  2. Thank you Randy and Jason. This is just the information I needed. I have a song coming out shortly in Nashville and this will help me. Well done and thanks once again.

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